More auto consumers want to buy a car without setting foot in a dealership, evidenced by a 37% year- over-year increase in the number of digitally-issued auto retail installment contracts on eOriginal’s platform in September.
The fintech processes loans issued digitally for more than 600 banks and auto lenders, including CarMax Auto Finance, Carvana, Chase Auto, Credit Acceptance Corp., Harley-Davidson Financial Services and Westlake Financial, Chief Executive Brian Madocks told Auto Finance News. The Baltimore, Md.-based fintech, founded in 1996, provides post-execution services for financial asset documents, including e-signature solutions, according to Crunchbase.
At the end of September, eOriginal was processing about 77,000 digital auto loans per week, compared to 55,000 per week during the same period in 2019, Madocks said. Part of the uptick is due to lenders restructuring consumer loans during the pandemic, such as through extensions or by lowering monthly payments. Each restructure creates a new transaction on eOriginal’s platform, Madocks noted.
U.S. auto sales also rose by 3.9% month over month in September, largely due to consumers becoming more comfortable buying cars online, Madocks added. “Across the board, consumers are heading [to digital] – period,” he said. “Once you’re doing it this way, you’re never going back to the old way of doing things. We’re seeing the same thing going on in our business.”
It’s common for consumers to research cars and financing options online before stepping into a dealership, a trend that is likely to continue, Madocks said. “When you look at the number of visits to a dealer before buying a car, that was trending down because people are doing so much more research before going into the dealership,” he said. “I think you’ll see a tremendous continuation and spike in that.”
The increase in digital loan contracting through eOriginal’s platform points to an uptick in consumers not only researching and applying for cars online, but looking to purchase vehicles without visiting a dealership, Madocks said.
“Auto overall has the highest adoption rate of digital [contracting solutions], second to personal loans, but the transaction still takes place in that finance manager’s office. They always want the consumer in the office for the upsell opportunities,” Madocks said. “But now, for both the consumer need and the safety of the people in the dealership, the compelling event is COVID to enable full online lending, which you’re now seeing happen.”
COVID has also helped knock down several regulation barriers to digital car buying. During the pandemic, the number of states that allowed remote notarization of loan documents rose to 47 from 24, Madocks added. “There is a very strong movement to make all of those states that have adopted [remote notarization] on a temporary basis, permanent,” he added.
“I don’t see any stopping of this process,” Madocks noted.
